1. In capital budgeting, the financial manager tries to identify investment
opportunities that are worth more to the firm than they cost to acquire.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
2. The size, timing and risk of cash flows are important when evaluating a
capital budgeting decision.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
3. A capital expenditure project becomes desirable when the project is worth
more to the firm than the cost to acquire it.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
[Type text]
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4. A capital expenditure project becomes desirable when the value of the cash
flow generated by the project exceeds the project's cost.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
5. Capital structure determines the least expensive sources of funds for the firm to
borrow.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
6. Capital structure determines how much debt the firm should have in relation
to its level of equity.
TRUE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
7. Capital structure determines the level of current assets that is required to
maintain the firm's operational level.
FALSE
Accessibility: Keyboard
Navigation Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial
manager. Topic: 01-04 Financial Management Decisions
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, [Type text]
1-2
[Type text]
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